Mesa Merchant Cash Advance Attorney: How to Defend Yourself Against Predatory Lending
Merchant cash advances, often called MCA’s, can seem like an easy fix for small business owners in Mesa, Arizona struggling with cash flow problems. Unlike traditional bank loans, MCA’s don‘t require good credit or collateral. You can get approved and funded in just a few days.But MCA’s come with serious downsides. Their interest rates often exceed 100%, even 200% or more. Critics call them a form of predatory lending that takes advantage of small business owners already in financial distress.If you took out a merchant cash advance in Mesa, you may be facing aggressive collection tactics or even a lawsuit from the MCA provider. Don’t panic – you have options. Read on to learn how a Mesa merchant cash advance attorney can help protect your rights.
How Merchant Cash Advances Work
With a merchant cash advance (MCA), the lending company advances you a lump sum of cash. In exchange, you agree to pay back the advance through a percentage of your future credit card and debit card sales.
-- MCA’s are not considered loans. This allows providers to skirt usury laws that cap interest rates on loans.
- There is no set repayment schedule. The MCA takes a fixed percentage of your daily credit card sales until the balance is repaid.
- The effective APR is usually over 100%, sometimes up to 300-500%. Much higher than a bank loan.
- MCA’s require you to sign a personal guarantee making you personally responsible for the debt.
- They often include confusing terms and lack of transparency about the true cost.
This structure allows MCA providers to target small businesses with poor credit who can’t qualify for traditional financing. While the quick cash may provide temporary relief, the extremely high rates often plunge already struggling businesses deeper into debt.
Predatory Lending Tactics
Critics accuse many merchant cash advance companies of predatory tactics including:
- Misleading merchants about the true cost
- Charging excessive fees
- Requiring access to the business’ bank accounts
- Filing UCC liens against the business owner’s personal assets
- Including confessions of judgement in contracts
Confessions of judgement allow the lender to obtain a judgement without even notifying the borrower. This limits your ability to defend yourself if sued.
Some of the most common predatory MCA lenders include:
-- Kodiak Funding
- Pearl Capital
- Fox Capital
- Strategic Funding
- Ace Funding
And the collection law firms that represent them:
- Jason Gang
- Berkovitch and Bouskila
- Law Office of Vadim Serebro
- Feldman Law Firm
- Yana Chechelnitsky
Don’t Wait to Get Help
If you‘re facing aggressive collection calls, liens, or a lawsuit from an MCA provider, it’s critical to act quickly. Consult with an experienced Mesa merchant cash advance attorney as soon as possible.Trying to negotiate or deal with the MCA company yourself can make matters worse. An attorney knows how to protect your rights and defend your business.
How a Merchant Cash Advance Attorney Can Help
A knowledgeable MCA lawyer can provide a number of valuable services:
Review Your Contract and Lawsuit
- Carefully review your MCA contract and any legal complaint filed against you.
- Identify any prohibited lending practices, flaws in the lawsuit, or defenses you may have.
–Many recent court rulings have found MCA’s to be high interest loans subject to state laws. Your contract may be unenforceable.
File a Response and Counterclaim
- If sued, you must file an official legal response by the deadline or risk a default judgement against you.
- An attorney can file a response disputing the claims and asserting counterclaims for violations of lending laws.
Negotiate a Settlement
- In many cases, negotiating a settlement outside of court is preferable to a lengthy legal battle.
- An experienced attorney has the skills to negotiate a reasonable settlement that reduces what you owe.
Defend You in Court
- If sued, your attorney can represent you in court, argue your defense, and advocate for your rights as a borrower.
- They will handle filings, court appearances, document requests, and questioning witnesses.
Fight Back Against Abusive Collection
- If the MCA company uses illegal collection tactics like harassing calls or improper threats, your lawyer can take action to stop it.
- They can send cease and desist letters or file complaints with regulators like the CFPB.
Explore Debt Relief Options
- If you simply can’t afford your payments, debt settlement or bankruptcy may be an option.
- An attorney can advise if these are appropriate and help negotiate or file for protection.
4 Top Defenses Against Merchant Cash Advance Lawsuits
If you‘re sued for breach of contract over an MCA, there are several legal defenses your attorney may assert:
-1. Unconscionability
Argue the contract terms are unfair, one-sided, and exploit distressed small business owners. Courts can refuse to enforce unconscionable contracts.
2. Usury Violations
Allege the MCA’s effective interest rate violates state laws against usury (excessive interest). Recent cases have found MCA‘s are high interest loans in disguise.
3. Improper Conduct
Claim the MCA company engaged in improper conduct like deception or harassment. This can invalidate the agreement or entitle you to damages.
-4. Breach of Contract
Argue it was the MCA provider, not you, who violated the contract terms first. This can release you from the contract.